Transfer of equity is a legal process involving changes to property ownership such as adding or removing individuals from the title deeds of a property.
You must hire a transfer of equity solicitor to work on your behalf. They ensure all paperwork is completed correctly and help to protect you from undue influence.
In this guide, we’ve gathered everything you need to know about the process.
Choosing a Solicitor for Transfer of Equity
While hiring a solicitor is only a legal requirement for the person receiving the equity from the property, it’s recommended all parties use a transfer of equity solicitor. They are specially trained and ensure the transfer is approved and completed correctly.
Seeking advice from a solicitor is particularly important if the property has a mortgage because more steps are involved when transferring equity. For example, you must have authorisation from the mortgage lender to complete the transfer.
At Compare My Move, we have a network of professional conveyancers who are licenced and can assist with your application.
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Transfer of Equity Costs
Transfer of equity costs an average of £2,800 plus 1% - 5% of the property value. Many factors impact the total cost, such as whether you have a mortgage and the solicitor you choose.
Here is a breakdown of the average costs*:
| Approximate Cost | |
|---|---|
Solicitor’s fees | £540 |
| Stamp duty | £1,750 |
Anti-money laundering checks | £5 |
Bank transfer fee | £40 |
Land registry fees | £40 |
Freeholder consent | Up to £250 |
Remortgage | £175 plus 1%-5% of property value |
Total | £2,800 plus 1%-5% of the property value |
*Costs taken from our Average Conveyancing Fees data and are based on the average UK house price of £285,000
Conveyancing Process for Transfer of Equity
Below are the steps in the transfer of equity legal process:
Appoint a Transfer of Equity Solicitor
The first thing you must do is choose and appoint a transfer of equity solicitor to represent you.
If someone is joining the title, both parties can be represented by the same solicitor. If someone leaves the title, the transferor and transferee need separate representation.
Instruct Your Solicitor
After choosing a transfer of equity solicitor, they will obtain an official copy of the title deed for the property from the Land Registry.
You must provide identification and any relevant documents regarding the property. If the property is leasehold, your solicitor will need a copy of the lease.
One of the primary documents your solicitor will complete is a TR1 form. This document transfers ownership of a property from one party to another.
Review the Mortgage
Your solicitor will check any outstanding mortgages and property charges. If there is a mortgage on the property, you will need the existing mortgage lender's consent to proceed with the transfer. All parties listed on the legal title are equally liable for the mortgage.
If you are removing someone from the property deeds, the mortgage lender will check if you can afford the mortgage on your own. If they don’t agree to the transfer, you must repay the mortgage cost outright.
Completion
When the transaction is complete, your solicitor will arrange the transfer of any funds between parties. They will file the relevant documentation with the Land Registry.
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When Do I Need a Transfer of Equity?
You can choose to transfer full or part ownership of a property. Here are some of the most common cases:
Adding Another Person to the Title
Adding a new partner or spouse to the title provides them with financial interest in your home. This typically occurs when marrying or entering into a civil partnership.
If you transfer equity to an existing partner, one of the existing owners must be listed at the time of the transfer. This is important for unequal shares and transferring equity in joint names.
Removing Someone From the Title
When splitting or divorcing from a former partner, you may want to remove them from the transfer deeds and separate your finances. Both parties must negotiate how much has to be paid to buy out the remaining equity.
Going From Joint to Single Ownership
Transferring a jointly owned property to sole ownership can be complex. Additional changes will need to be made to the existing deed.
Gifting Full or Part Ownership
You may want to gift full or part ownership of the property to a family member or child for inheritance or tax reasons.
Gifting ownership to your children can help reduce the amount of Inheritance Tax owed. This is common when tax planning. There can be tax implications if the transfer falls through.
Use as a Deposit
Those looking to invest in a second property may sell part of their equity to use as a deposit.
Equity can also be used to make improvements to the property to raise its value.
How Long Does a Transfer of Equity Take?
If there’s no mortgage on the property, the transfer of property ownership can be completed in a matter of days to a couple of weeks. You can speed up the process by arranging for both parties to sign the transfer papers at the same time.
It normally takes longer to transfer equity if you have a mortgage. If you need to remortgage to buy out a partner the timescale will be dependent on the remortgage process. This can be up to six to eight weeks.
Complex cases such as separations or divorces can slow things down, especially if one party doesn’t consent to the transfer.
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Finding a Conveyancer
At Compare My Move, we can connect you with up to 6 licensed conveyancers to assist you with your transfer of equity. Fill out our comparison form to compare conveyancing quotes and save on your fees.
Our conveyancing partners must provide proof that they are regulated by one of the following regulatory bodies:
Solicitors Regulation Authority (SRA)
Council for Licensed Conveyancers (CLC)
Law Society of Scotland (LSS)
Law Society of Northern Ireland (LSNI)
Chartered Institute of Legal Executives (CILEX)
Need a Surveyor?
Once you've found a conveyancer, you soon might need the help of a RICS property surveyor. Simply fill in our integrated conveyancing and surveying comparison form to get connected today.
You can compare companies through our integrated conveyancing and surveying form by filling out a few extra steps. We will then connect you with local conveyancers and surveyors to save on the whole process.
Frequently Asked Questions:
Do both parties need a solicitor for Transfer of Equity?
Hiring a solicitor is legally required for the transferee (the party receiving the transferred equity). The transferor (the party giving the transferred equity) does not legally have to hire a solicitor.
It is highly recommended both parties have solicitors. In most cases, all parties will have representation to complete the legal paperwork involved.
Do I have to pay Stamp Duty for transfer of equity?
Stamp Duty Land Tax (SDLT) may be payable and the amount differs between property transactions. This tax is paid in England and Northern Ireland. In Scotland, it is called Land and Buildings Transaction Tax (LBTT) and in Wales, it is Land Transaction Tax (LTT).
You will have to pay SDLT when:
- Transferring equity to a spouse or partner
- Buying out another party
- Receive a property with an outstanding mortgage
You will not have to pay SDLT if:
- The value of the transfer is under £125,000
- Receive a property with no mortgage
- Equity transfers are a result of divorce, legal separation or court order
How do I transfer ownership if there is a mortgage on the property?
When you transfer equity, the new owners will be responsible for the mortgage payments. The remaining owners must apply for a new mortgage offer.
They must pass the mortgage lender’s eligibility and mortgage affordability checks. The lender will ensure they have residency rights in the UK and are within the appropriate age range as it is a credit agreement.
Many people remortgage for a higher amount than their existing mortgage. They then pay the other person with the surplus cash. You may have to pay off some of the loans with cash savings or remortgage to a different lender, depending on your circumstances.
